National objectives for solar and wind energy will significantly decrease the dependence on natural gas and lead to more stable electricity prices across Europe. Key regions that will benefit the most include the UK, Ireland, the Nordic countries, and the Netherlands.
Achieving the established national goals for solar and wind energy by 2030 could lower the volatility of electricity markets by about 20% across 29 European nations, a recent study from the University of Cambridge indicates.
By the end of the decade, the intensity of electricity price spikes is expected to decline in every participating country if the commitments to renewable energy are upheld, thereby decreasing reliance on natural gas.
The UK and Ireland stand to gain the most, predicting a reduction of 44% and 43% in the severity of electricity price spikes by 2030, compared to previous years.
Germany could see a 31% drop in electricity price volatility, while the Netherlands and Belgium might experience reductions of 38% and 33% respectively.
Findings from the study suggest that increasing renewable energy adoption minimizes the effects of shifts in natural gas prices—enhancing market stability—even taking into account the weather dependencies of renewable energy sources.
In light of energy security concerns post-Russian aggression in Ukraine, several EU leaders and energy ministers have advocated for renewable energy targets as a means of enhancing energy independence and reducing carbon emissions.
Detailed in the journal Nature Energy, the study quantitatively examines how ambitious renewable energy objectives would impact the fluctuations of wholesale electricity prices across European energy markets.
“The fluctuations in energy prices can severely disrupt national economies,” stated Laura Diaz Anadon, a Professor of Climate Change Policy at the University of Cambridge.
“Consumers are still feeling the adverse effects of soaring electricity prices due to natural gas shortages after Russia’s invasion of Ukraine,” Anadon noted. “Our findings reveal that meeting renewable energy targets will significantly lower the chances of experiencing similar price spikes in the future.”
Researcher Daniel Navia from the University’s Centre for Environment, Energy and Natural Resource Governance (CEENRG) added, “Achieving renewable energy goals not only contributes to carbon neutrality but also bolsters economic resilience.”
“Our understanding of the significant costs associated with energy price shocks was likely underestimated, and the recent crisis has underscored this reality.”
Using the University’s high-performance computing resources, the Cambridge team examined various factors—like weather variations and energy demand fluctuations—in order to simulate the present and future energy grids of all 27 EU countries along with the UK and Switzerland.
The researchers evaluated the state of electricity markets in 2030 based on each nation’s pledges to renewable energy outlined in their national energy and climate strategies.
“Particularly in the UK, we anticipate significant improvements in energy market stability due to renewable sources,” Anadon mentioned. “The UK has faced challenges due to its susceptibility to gas prices, attributed to a lack of energy storage solutions and limited integration with the European grid, resulting in more instances where electricity prices are determined by natural gas expenses.”
The analysis further indicates that if countries adhere to their current renewable energy commitments, wholesale electricity prices could drop by more than 25% on average by the decade’s end.
This shift could particularly benefit residents of the UK and Ireland, where electricity prices are projected to decrease by around 45% by 2030 compared to present levels.
Many Nordic countries might see reductions in electricity prices exceeding 60% by 2030, while Germany could witness a 34% price drop, with Belgium closely following with a 31% reduction. The Netherlands may see a decrease of about 41% in electricity costs.
While the authors of the study caution that future electricity price trends are influenced by unpredictable factors, they believe their findings align with recent conclusions from organizations like the International Energy Agency.
Navia and Anadon argue that their modeling may even represent a conservative estimate regarding electricity price stability across Europe, as it utilized data from 1990-2021, predating the current energy crisis triggered by Russia’s invasion of Ukraine.
“Viewing renewables as a security investment is a logical stance; failing to maintain momentum toward green energy not only harms the climate but also poses unpredictable risks in the future,” Anadon emphasized.
The study also explores the potential effects on electricity prices if countries exceed their renewable energy targets. Surpassing these goals by 30% could lead to a 50% reduction in price sensitivity to natural gas compared to merely achieving the targets.
Nevertheless, the research warns that there are critical thresholds where an oversupply of renewables could lead to electricity prices falling to levels that deter investment returns, potentially stagnating the green energy sector.
Navia concluded, “To fully leverage solar and wind as tools for energy security, Europe may need to reevaluate its energy market structure and consider incentives for the private sector to sustain the social and economic benefits presented by renewable energy.”
